Five Israeli Cities Lead Construction Growth Amid Shifting Housing Prices
Housing prices in Israel are subject to constant fluctuation, varying significantly between neighborhoods and even adjacent streets, primarily driven by supply and demand dynamics influenced by construction starts. A recent analysis of Central Bureau of Statistics data reveals the five cities experiencing the most substantial increases in new construction starts: Kfar Saba, Yehud-Monoson, Ashkelon, Kiryat Gat, and Herzliya. While increased construction can theoretically lead to price drops, the actual impact depends heavily on local demand. For instance, building numerous new apartments in an area with already high supply and low demand, like Ofakim, is likely to depress prices. Conversely, constructing a small apartment building in a desirable neighborhood in cities like Givatayim or Jerusalem could drive prices up.
Kiryat Gat's construction boom is largely attributed to the development of the Carmei Gat neighborhood and government housing programs. Yehud-Monoson's growth is fueled by large-scale projects and government tender methods. Ashkelon has seen a surge in building activity post-war, responding to a high demand for apartments equipped with protected rooms (Mamad). Kfar Saba's development is concentrated in areas like the Young City and Kfar Saba Green, while Herzliya's acceleration is notable in the upscale Galil Yam neighborhood.
It's important to note that percentage increases can be misleading if the baseline construction volume is low. Kfar Saba, for example, had minimal construction in the previous period, making its recent surge appear dramatic. Kiryat Gat and Ashkelon each commenced construction on over 2,000 units in the analyzed year. Other cities with significant construction volumes exceeding 2,000 units include Bat Yam, Netanya, Ramat Gan, Petah Tikva, Haifa, Jerusalem, and Tel Aviv. Tel Aviv, in particular, saw a nearly 20% increase, with 7,611 apartments built in the last year, approximately four times the number constructed in cities like Lod and Netanya.
